Analysts at Needham & Company expressed confidence that Taiwan Semiconductor Manufacturing Co. is on track to achieve $110 billion in revenue by 2025.
Investing.com — The company raised its price target on TSMC shares to $225, up from $210 in a note on Friday, as it anticipates a possible improvement in gross margins.
A year ago, Needham advanced its TSMC revenue estimates to 2025, with the initial figure of $110 billion significantly higher than the consensus estimate of $96 billion.
Following a series of “win and rise” quarters by TSMC, the firm said the consensus has now aligned with this forecast, indicating strong market confidence in the semiconductor giant's growth trajectory.
“We reiterate our view that $110 billion remains the correct revenue figure for next year,” Needham said.
Looking ahead, TSMC's revenue is expected to reach approximately $90 billion in 2024, positioning the company for substantial growth of 23% in 2025.
“Now, with TSMC’s 2024 revenue potentially reaching $90 billion, reaching $110 billion in 2025, representing 23% growth, has become a real possibility,” Needham said. “The Street has also come around to this view and the consensus estimate has moved to $110 billion, which is a significant advance from the $96 billion consensus a year ago.”
Analysts believe margins could also see significant improvements, with gross margins potentially recovering to 60% in the second half of 2025.
The optimistic outlook is due to the absence of N2 production, which could dilute margins if introduced prematurely.
Needham emphasizes that TSMC's growth in 2025 is likely to be driven more by volume than price. As the company's N5 capacity growth stabilizes and N3 capacity additions conclude, analysts anticipate a shift in focus from average selling price (ASP) increases toward increased wafer shipments.
By 2025, they project 13% growth in wafer shipments, while ASP could increase only 10%, reflecting a more conservative approach compared to previous years.
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